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Taglialatela v. Galvin

Court of Chancery of Delaware

February 23, 2015

Robert E. Taglialatela, Jr. Plaintiff,
v.
Phyllis T. Galvin, Trustee Irrevocable Trust of Robert E. Taglialatela, Sr. Defendant

Date Submitted: October 27, 2014

Draft Report: August 14, 2014

Daniel Crossland, Esquire, Beatrice Juliano, Diane Green, Elizabeth T. Gorman, Francine Schmitt

MASTER'S REPORT

KIM E. AYVAZIAN MASTER IN CHANCERY

Pending before me are exceptions to the Accounting of the Robert E. Taglialatela Irrevocable Trust (the "Trust") filed by its former trustee, Phyllis Galvin-Moore. The Trust was created by Robert E. Taglialatela, Sr. in 1998 for the benefit of his six children: Beatrice Juliano, Robert E. Taglialatela, Jr., Phyllis Galvin-Moore, Diane Green, Francine Schmitt, and Elizabeth ("Beth") Gorman. Robert, Beatrice, and Beth are the three beneficiaries who have taken exceptions to the accounting.[1]

Factual Background

The Trust originally held one asset, real property located at 100 High Street, Oxford, Maryland (the "Oxford Property"), that had been purchased in 1976 as a future retirement home for Mr. and Mrs. Taglialatela, Sr., who resided in Lansdale, Pennsylvania.[2] In 1988, Beatrice moved into the Oxford Property with her family after her husband lost his job, and Beatrice remained there with her two children for 22 years without paying rent; her parents paid the expenses related to the property.[3] In 1998, Mrs. Taglialatela suffered a stroke and the couple became concerned about their future health care costs.[4] A trust agreement was drafted by a Delaware lawyer who, at the time, was in a relationship with their daughter Phyllis, [5] and the couple transferred the Oxford Property into the Trust. Mrs. Taglialatela passed away in 2002, and as Mr. Taglialatela, Sr. began to suffer his own health problems, tensions developed among his children in part due to Phyllis's unilateral actions.

In 2008, Phyllis, in her capacity as Trustee, conveyed the Oxford Property back into her father's name because she doubted that the Trust was still in existence.[6] Approximately six months later, Phyllis, in her capacity as power of attorney for Mr. Taglialatela, Sr., conveyed the Oxford Property to herself in her capacity as Trustee, after she obtained a copy of the trust agreement.[7]

In 2009, Phyllis sought to have her father, who was suffering from dementia, declared incompetent by a Pennsylvania court.[8] After a hearing in November 2009, the court appointed a neutral professional guardian, Supportive Care Services, as guardian of Mr. Taglialatela, Sr., who was then removed from his home and placed in an assisted living facility in Pennsylvania.[9] Around this same time, Phyllis sued Beth in Maryland for non-payment of a loan Phyllis had made to Beth in 1993.[10] They eventually settled the dispute for $3, 000.00, but Beth had no money so Phyllis put a lien on Beth's share of the Trust.[11]

In November 2009, Francine drove her father to Oxford to spend Thanksgiving with Beth's family.[12] Phyllis called several police agencies in Maryland and Pennsylvania, and the Maryland Department of Social Services to report a kidnapping and possible neglect case.[13] In early December 2009, Phyllis sent Beatrice an eviction notice.[14] Shortly thereafter, Phyllis sent Beatrice a proposed rental agreement for the Oxford Property for $1000.00 per month.[15]Beatrice refused to pay rent, but voluntarily vacated the Oxford Property on June 19, 2010.[16]

On June 24, 2010, Francine took her father to a hospital emergency room; he was diagnosed a week later with advanced cancer.[17] When Beatrice's two daughters tried to visit their grandfather in the hospital, they and other family members were ordered to leave by hospital staff at Phyllis's direction.[18] Mr. Taglialatela, Sr. died in July 2010. According to the terms of the Trust, upon the death of Mr. Taglialatela, Sr., the undistributed net income and principal were to be distributed to his six children.[19]

Phyllis, who was named as executrix in her father's will, hired a Pennsylvania estate attorney, [20] but another Pennsylvania attorney, Stacy Greenberg, was appointed as administrator of Mr. Taglialatela, Sr.'s estate.[21] The estate was insolvent so Mr. Taglialatela, Sr.'s home and tangible personal property in Pennsylvania were sold at auction to pay creditors, with family members having to bid on any sentimental items they wished to retain.[22] Phyllis was one of the creditors since she had paid the costs associated with Mr. Taglialatela, Sr.'s assisted living facility.[23]

The same Maryland law firm that assisted Phyllis in her suit against Beth had been providing Phyllis with trust-related advice since October 23, 2009.[24]After Beatrice vacated the Oxford Property, Phyllis, in her capacity as Trustee, sold the Oxford Property for $187, 000.00 on November 17, 2010, and the net sale proceeds of $158, 895.85 were placed in the Trust.[25]

Shortly before the sale of the Oxford Property, Robert had filed a pro se petition in this Court on September 22, 2010, seeking to remove Phyllis as trustee for threat of self-dealing and breach of fiduciary duty.[26] Robert unsuccessfully attempted to serve Phyllis with a summons and a copy of the petition at her home on multiple occasions, and at her workplace in Wilmington, Delaware.[27]Nevertheless, Phyllis was aware of her brother's petition. On September 27, 2010, Phyllis's Maryland attorney reviewed Robert's petition, [28] and on November 23, 2010, Phyllis consulted with a Delaware attorney at Woloshin, Lynch, Natalie and Gagne, P.C. (the "Woloshin firm"), about Robert's trust petition.[29] In a letter to the beneficiaries dated November 24, 2010, [30] Phyllis's Maryland ...


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